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B Communications Reports Second Quarter 2011 Financial Results

Stocks in this article: BCOM

B Communications Ltd. (NASDAQ Global Select Market and TASE: BCOM) today reported its financial results for the quarter ended June 30, 2011 and its cash position and loan repayment status as of June 30, 2011.

Bezeq Delivers Another Strong Quarter

The Bezeq Group reported another strong, stable quarter, delivering revenues of NIS 2.9 billion (US$ 849 million) and operating profit of NIS 935 million (US$ 274 million) in the second quarter. Bezeq’s EBITDA for the second quarter of 2011 totaled NIS 1.3 billion (US$ 381 million), representing an EBITDA margin of 44.35%, and cash flow from operating activities reached NIS 670 million (US$ 196 million).

Debt Repayment Plan Continues to Progress Ahead-of-Schedule

As of June 30, 2011, B Communications had exceeded its original plan for the repayment of the bank debt it incurred to fund its April 2010 acquisition of the controlling interest (approximately 30%) in Bezeq - The Israel Telecommunication Corp., Ltd. (“Bezeq”). From April 14, 2010 through June 30, 2011, B Communications repaid approximately NIS 1.5 billion (US$ 439 million) of its bank debt, including NIS 1,307 million (US$ 383 million) of principal and NIS 223 million (US$ 65 million) of interest and CPI-linked expenses.

Dividends Received from Bezeq

On May 19, 2011, B Communications received two dividends from Bezeq totaling NIS 520 million (US$ 152 million) that consisted of:

  • Current dividend totaling NIS 363 million (US$ 106 million), representing B Communications’ share of Bezeq’s net profit for the second half of 2010; and
  • Special dividend totaling NIS 157 million (US$ 46 million), the first of six equal special dividends to be paid with no interest or index adjustments on a semi-annual basis through 2013, totaling approximately NIS 3 billion (US$ 878 million) over a three year period, as declared by Bezeq's Board of Directors and approved by the Israeli Court.

B Communications’ Cash Position

As of June 30, 2011, B Communications’ unconsolidated cash and cash equivalents totaled NIS 394 million (US$ 115 million), and its unconsolidated gross debt was NIS 4.7 billion (US$ 1.4 billion). Having increased its ownership interest in Bezeq during the first quarter, B Communications now owns 31.23% of the outstanding shares of Bezeq.

B Communications’ Unconsolidated Balance Sheet Data*

  As of June 30, 2011
(NIS millions)     (US$ millions)
Short term liabilities 478 140
Long term liabilities 4,242 1,242
Total liabilities 4,720 1,382
Cash and cash equivalents 394 115
Total net debt 4,326 1,267

* Does not include the balance sheet of Bezeq.

B Communications’ Second Quarter Financial Results

B Communications’ revenues for the second quarter were NIS 2,893 million (US$ 847 million), an increase of 12.7% compared with NIS 2,566 million (US$ 751 million) reported in the second quarter of 2010. For both the current and the prior-year periods, B Communications’ revenues consisted entirely of its share of Bezeq’s revenues. However, for the second quarter of 2011, B Communications’ revenues included its share of Bezeq's revenues for the entire quarter, while during the second quarter of 2010, B Communications began to consolidate its share of Bezeq’s revenues commencing April 14, 2010, the date of its acquisition of the controlling interest in Bezeq.

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